Money Management 101 and beyond?

Money Management 101 and beyond?

  • strict flat bets

    Votes: 3 30.0%
  • percentage bets

    Votes: 5 50.0%
  • hybrid strategy

    Votes: 2 20.0%

  • Total voters
  • Poll closed .
Money Management 101 and beyond?<O:p</O:p

This topic is dear to my heart and I would very much like to se some discussion on the topic. I apologize for the cross posting.<O:p

In order to be a successful sports bettor you need to hit your picks. NO question about that! However, in order to be a winning sports bettor you need to have some money to invest in you picks. You simply cannot afford to loose your bankroll (bankroll defined as the maximum amount you can loose before you have to stop betting).<O:p

There seem to be some debate or high-pitched passionate believes about the pros and cons of different money management strategies. Basically there seem to be two alternatives: flat bets and proportional bets (a fixed percentage of your bankroll). There are of course several trade-offs, some mixtures of the two basic approaches

The flat bettors seem to argue that a loosing season is not acceptable when you hit more picks than break even. How on earth can you loose money when you hit enough winners? Well, if you fiddle with you bet size it is possible

But if your intuition works the way mine works it seems reasonably to bet more on your stronger picks. Also it seems right to bet slightly more when you are winning. Magic formulas such as the Kelly criterion are designed to guide you in your bet sizing. That sounds great but there are few quirks in the Kelly formula: 1) you need the true win percentage of the pick as an input to the formula. 2) The formula will suggest surprisingly large bets on strong picks.<O:p

I have not bothered to track down the original Kelly article but I have a gut feel that the article is sound given the rather strong assumptions that you know the true winning percentages and that you want to maximize the bank roll growth rate without considering different preferences for ruin probabilities (i.e. the chances of going broke)?<O:p

Ergo: There seem to be advantages and disadvantages with both approaches. Is it a matter of taste or are there strong theoretical arguments for a particular approach?<O:p
Kelly is inherently a losing formula. It might work short term, but long term it makes your losing plays a lot more costly. Simply because any early success one might have will in fact build their bankroll, but once you start upping though bets proportionally what might have oncebeen a 1000 bet at 10% of you starting bakroll might now be a 6-7 thousand dollar bet made possible by the expected streaks one can have ( like you say getting a TRUE FIXED win expectaition) so a nice win streak CAN in fact get you from a 10K t a 50-75K bankroll if you have anice win streak. But eventually those win streaks come to an end. So when they do, your bannkroll management tells you to bet the same 10% or whatever it is on those plays. So you are now basically betting 60-70% of your ORIGINAL bankroll. So it doesn't take long for the guys that got hot, and made money to piss it all away.

The one fact that shows me that Kelly doesn't work, no ifs ands or buts, is that I have yet to see a single gambler on any list of the richest people in the country, let alone the world. if Kelly was so fool proof, and there are some pretty smart guys using it, it would seem to me that these geniuses would have made enough money over the past few years that Kelly has been the rage to crack into that list of elite rich people.

Short term it might work, long term it will never work. And if you are consantly taking money out when you make it and keeping your bank roll static won't work, because a lot of time you will go broke betting the percentages it suggests so you will constaly be reloading with that money you withdrew anyway.

The General

Another Day, Another Dollar
farbror, nice topic. Thanks for posting. I'm a flat bettor. I used to call in plays like this..

$500 on Dallas, $200 on Chicago, $500 on Wahington, $300 on SF, etc....

It always seemed I would lose my big plays and win my smaller plays.

I am a dollar or less player these days. Whatever works for each individual is acceptable.


I always play a flat amount on every bet. This can be tough, as Im always tempted to play more on bets I really like. I stick to the 2% of original bankroll rule, until the bankroll increases or decreases by 50%. What I like about this method is that one losing bet will only erase one winning bet (not including the vig). The thrill of the big wins and dissapointment of the big losses just doesn't happen.

The General

Another Day, Another Dollar
The thrill of the big wins and dissapointment of the big losses just doesn't happen.

I went 1-5 last Sunday, slept well. 2-0 plus some horse $ on Tuesday, slept well, 2-1 last night and slept well. I may go 0-3 tonight, but will sleep well. I refuse to let betting dictate my mental health. Good money management is a cure for a lot of gamblers problems.<!-- / message -->
The General said:
Whatever works for each individual is acceptable.

I totally agree. That is solid advice but I would say not as simple as it might appear. My strong belief is that an overall plan for your betting exercises is important. "Whatever works" is relative to your overall plan,your goals if you like.

Changing gears too often will break your bones.